Case Name: SunPower Corporation v. Martin DeBono, et al.
Case No.: 19-CV-349042

Currently before the Court is the motion by defendants Standard Industries, Inc. (“Standard”) and GAF Energy to quash discovery and for an order barring further discovery until plaintiff SunPower Corporation (“SunPower”) provides an adequate trade secret designation under Code of Civil Procedure section 2019.210.

Factual and Procedural Background

This action arises out of defendant Martin DeBono’s (“DeBono”) alleged misappropriation of SunPower’s proprietary information and trade secrets. According to the allegations of the complaint, DeBono was SunPower’s Executive Vice President of Global Channels and responsible for SunPower’s rooftop solar business. (Complaint, ¶ 1.) When he started at SunPower, DeBono signed a non-disclosure agreement whereby he agreed to safeguard SunPower’s confidential information and work exclusively for SunPower during his employment. (Id. at ¶ 84.) DeBono later signed an employment agreement, in which he agreed not to actively engage in any other employment without his supervisor’s prior approval. (Id. at ¶ 85.)

While he was still employed with SunPower, DeBono began covertly working for Standard. (Complaint, ¶ 3.) Specifically, DeBono drafted materials and a PowerPoint presentation related to how Standard could take over the integrated rooftop solar market, forwarded proprietary and confidential emails to a private email account, and uploaded over 1,700 SunPower files to a private OneDrive account. (Id. at ¶¶ 3-5, 47-49, 52.) The emails contained confidential guidance to SunPower’s sales team “on how to explain in detail to prospective and existing customers why SunPower’s solar offerings are better than the competition,” “a roadmap on different ways to differentiate and distinguish the competition, often through use of technical and product testing data,” and “confidential and proprietary information about SunPower’s sales strategy approach and execution.” (Id. at ¶¶ 3 & 47.) The files uploaded to the OneDrive account contained “confidential technical information regarding SunPower’s research and development of products and technology,” “a confidential analysis of different ways to differentiate and distinguish the competition, often through use of technical and product testing data,” and “proprietary, confidential, and trade secret information about SunPower’s sales strategy approach and execution, product development, market analysis, dealer relationships, and strategic initiatives.” (Id. at ¶¶ 5, 53, & 54.)

When DeBono left SunPower on April 6, 2018, he entered into a separation agreement whereby he agreed to return all SunPower files and documents, not use any confidential and/or proprietary information for the benefit of any third party, and not solicit SunPower employees for one year. (Complaint, ¶¶ 2 & 86-89.)

However, DeBono allegedly left “with over 1,700 SunPower files providing a roadmap on how to build a successful solar business.” (Complaint, ¶ 2.) “These files included hundreds of SunPower confidential and proprietary documents ….” (Ibid.)

DeBono is now president of GAF Energy, Standard’s new rooftop solar division. (Complaint, ¶ 1.) “DeBono immediately began using SunPower’s confidential information to solicit and target other SunPower employees for hiring by Standard to build its new rooftop solar division, GAF Energy.” (Id. at ¶¶ 2, 7, & 58.) DeBono allegedly stole SunPower’s proprietary information and trade secrets to help Standard and GAF Energy “leapfrog past years of work needed to develop and market an integrated rooftop solar product.” (Id. at ¶¶ 1, 8, 9, & 38-42.)

Based on the foregoing allegations, SunPower filed its complaint against DeBono, Standard, and GAF Energy (collectively, “Defendants”), alleging causes of action for: (1) trade secret misappropriation; (2) breach of written contract; (3) breach of duty of loyalty; (4) aiding and abetting breach of duty of loyalty; and (5) violation of Penal Code section 502.

Discovery Dispute

In June 2019, SunPower served Defendants with a trade secret designation pursuant to Code of Civil Procedure section 2019.210. (Kao Dec., ¶ 3, Ex. 1.) Therein, SunPower identified its trade secrets allegedly misappropriated by Defendants as:

1. The SunPower files listed on Exhibit 1 the May 30, 2019 report entitled “Martin DeBono OneDrive Data Collection” prepared by Kivu Consulting, Inc. (“Kivu”), and any information derived, modified, or copied therefrom. […]

2. The 61 internal SunPower emails authored by Cole Peyton that Mr. DeBono emailed to his personal 1ive.com email account on October 31, 2017, and any information derived, modified, or copied therefrom. […]

(Ibid.)

With respect to its first identified trade secret, SunPower stated:

These files are compilations of sensitive and/or confidential business, sales, marketing, and product information that SunPower invested significant time and money in researching and constitute trade secrets because they are extremely valuable work product that is not known to SunPower’s competitors. The files include a compilation of information on confidential strategic initiatives, partnership agreements, pricing and cost information, competitor analysis, manufacturing information, sales strategies, marketing and advertising plans, for both existing and planned products, personnel information and product research and development.
(Kao Dec., ¶ 3, Ex. 1.) SunPower advised that “[a] redacted copy of the Kivu report that lists these trade secret files is attached to the [p]ublic version of this disclosure as Exhibit A.” (Ibid.) SunPower further stated, “There are over 1,700 other documents on the forensic report produced by Kivu” and “DeBono has taken a complete library of SunPower proprietary and confidential information, including a compilation of SunPower’s most valuable trade secrets.” (Ibid.) SunPower then explained that “[t]he documents, described in the bullet points below, are examples of the 1,700+ documents listed on Exhibit A to this Disclosure that … DeBono uploaded to his private OneDrive account, and then accessed after he left SunPower on April 6, 2018, that contain confidential, proprietary, and trade secret information, that is highly valuable to SunPower.” (Ibid.) Thereafter, SunPower described specific documents and categories of documents (e.g., “Quarterly Operations Review Reports” and “2017 KI Targets_Residential Cost Roadmap_Reference System”) that “contain highly confidential information regarding SunPower’s most valuable trade secrets and confidential business information.” (Ibid.)

With respect to its second identified trade secret, SunPower stated

These emails are weekly training emails sent to SunPower’s sales managers with advice about SunPower’s sales strategy approach and execution. This information is valuable to SunPower as a compilation because it is not generally known by SunPower’s competitors. These sales team e-mails are SunPower’s guidance to its sales team on how to explain to customers why SunPower’s products are better than the competition. The e-mails provide a roadmap on different ways to differentiate the competition’s offerings relative to SunPower’s products.

(Kao Dec., ¶ 3, Ex. 1.) SunPower advised that “[a] copy of the … DeBono’s forwarding emails that list the names of the confidential internal SunPower emails is attached to the Public Version of this disclosure as Exhibit B.” (Ibid.)

The next month, SunPower served Standard with requests for admission, set one (“RFA”), form interrogatories, set one (“FI”), special interrogatories, set one (“SI”), and requests for production of documents, set one (“RPD”). (Kao Dec., ¶¶ 5-8, Exs. 3-6.) SunPower also served Defendants with a deposition notice for DeBono, which included several requests for production of documents. (Id. at ¶ 4, Ex. 2.)

Thereafter, counsel for the parties met and conferred regarding SunPower’s pending discovery and the sufficiency of SunPower’s trade secret designation. (Kao Dec., ¶ 2; Fogarty Dec., ¶ 17.) Specifically, Standard and GAF Energy asserted that SunPower’s trade secret disclosure was inadequate. (Ibid.) Despite these meet and confer efforts, counsel for the parties were unable to informally resolve the discovery dispute. (Ibid.)

Consequently, on July 19, 2019, Standard and GAF Energy filed the instant discovery motion. SunPower filed papers in opposition to the motion on August 27, 2019. On September 3, 2019, Standard and GAF Energy filed a reply.

Discussion

Pursuant to Code of Civil Procedure sections 1987.1, 2019.210, and 2025.410, Standard and GAF Energy move to quash the deposition notice for DeBono, RFA, FI, SI, and RPD, and for an order barring further discovery until SunPower provides an adequate trade secret designation under Code of Civil Procedure section 2019.210. (Ntc. Mtn., p. 2:4-16.)

I. Request for Order Quashing Discovery

Standard and GAF Energy initially ask the Court to quash the deposition notice for DeBono, RFA, FI, SI, and RPD because SunPower’s trade secret designation is inadequate under Code of Civil Procedure section 2019.210.

“A basic principle of motion practice is that the moving party must specify for the court and the opposing party the grounds upon which that party seeks relief.” (Luri v. Greenwald (2003) 107 Cal.App.4th 1119, 1125.)

Standard and GAF Energy cite Code of Civil Procedure sections 1987.1, 2019.210, and 2025.410 as the legal basis for their motion.

But these provisions do not authorize a motion to quash discovery requests such as the RFA, FI, SI, and RPD. Code of Civil Procedure section 1987.1 governs subpoenas. Code of Civil Procedure section provides that “[i]n any action alleging the misappropriation of a trade secret …, before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.” The statute itself does not authorize any type of motion. Furthermore, Code of Civil Procedure section 2025.410 only governs deposition notices. Thus, Standard and GAF Energy have not provided a legal basis, and the Court is aware of none, for quashing the RFA, FI, SI, and RPD.

Additionally, Standard and GAF Energy have not provided a legal basis for quashing the deposition notice for DeBono. Code of Civil Procedure section 2025.410—the only statute cited by Standard and GAF Energy pertaining to deposition notices—authorizes motions to quash a deposition notice on the grounds that the deposition notice does not comply with Article 2 for the Discovery Act (i.e., Code of Civil Procedure sections 2025.210 through 2025.290). (Code Civ. Proc., 2025.310, subds. (a)-(c); CJER, Cal. Judges Benchbook, Civil Proceedings-Discovery (2019), § 15.16 [setting forth the grounds for a motion to quash under Code of Civil Procedure section 2025.410].) In other words, such a motion may be brought based on an error or irregularity in the deposition notice. Here, the motion is not based on an error or irregularity in the deposition notice. Rather, the motion is brought on the ground that SunPower’s trade secret designation is inadequate under Code of Civil Procedure section 2019.210. Standard and GAF Energy have not identified any legal authority, and the Court is aware of none, providing that this is a proper basis for a motion to quash under Code of Civil Procedure section 2025.410.

In fact, case law demonstrates that a party should, instead, move for a protective order if they contend discovery should not proceed because a trade secret designation is insufficient. (See, e.g., Perlan Therapeutics, Inc. v. Super. Ct. (2009) 178 Cal.App.4th 1333, 1336 (Perlan); Brescia v. Angelin (2009) 172 Cal.App.4th 133, 139 (Brescia); Advanced Modular Sputtering, Inc. v. Super. Ct. (2005) 132 Cal.App.4th 826, 831 (Advanced Modular).)

Accordingly, Standard and GAF Energy’s motion is DENIED to the extent it seeks to quash the deposition notice for DeBono, RFA, FI, SI, and RPD.

II. Request for Order Barring Discovery

Standard and GAF Energy also ask the Court for an order barring further discovery until plaintiff SunPower Corporation (“SunPower”) provides an adequate trade secret designation under Code of Civil Procedure section 2019.210.

As a preliminary matter, the statutes cited by Standard and GAF Energy as the legal basis for their motion—Code of Civil Procedure sections 1987.1, 2019.210, and 2025.410—do not authorize motions for an order staying discovery on the ground that a trade secret designation is inadequate.

Nonetheless, several statutes authorize motions for such a protective order. (See e.g., Code Civ. Proc., §§ 2019.020, subd. (b) [“on motion and for good cause shown, the court may establish the sequence and timing of discovery for the convenience of parties and witnesses and in the interests of justice”], 2025.420, subds. (a)-(b) [before a deposition, any party may promptly move for a protective order protect the party from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense], 2030.090, subds. (a)-(b) [when interrogatories have been propounded, any party may promptly move for a protective order protect the party from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense], 2031.060 [when requests for production of documents have been propounded, any party may promptly move for a protective order protect the party from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense], 2033.080, subds. (a)-(b) [when requests for admission have been propounded, any party may promptly move for a protective order protect the party from unwarranted annoyance, embarrassment, or oppression, or undue burden and expense].)

These statutes provide that Court may issue the requested order upon a showing of good cause. (See Code Civ. Proc., §§ 2019.020, subd. (b), 2025.420, subds. (a)-(b), 2030.090, subds. (a)-(b), 2033.080, subds. (a)-(b).)

The Court now turns to the question of whether good cause exists for the sought-after protective order.

“In any action alleging the misappropriation of a trade secret under the Uniform Trade Secrets Act …, before commencing discovery relating to the trade secret, the party alleging the misappropriation shall identify the trade secret with reasonable particularity subject to any orders that may be appropriate under Section 3426.5 of the Civil Code.” (Code Civ. Proc., § 2019.210.) A plaintiff alleging misappropriation of a trade secret “should describe the subject matter of the trade secret with sufficient particularity to separate it from matters of general knowledge in the trade or of special knowledge of those persons who are skilled in the trade, and to permit the defendant to ascertain at least the boundaries within which the secret lies.” (Diodes, Inc. v. Franzen (1968) 260 Cal.App.2d 244, 253.)

“[S]ection 2019.210 serves four interrelated goals: ‘“First, it promotes well-investigated claims and dissuades the filing of meritless trade secret complaints. Second, it prevents plaintiffs from using the discovery process as a means to obtain the defendant’s trade secrets. [Citations.] Third, the rule assists the court in framing the appropriate scope of discovery and in determining whether plaintiff’s discovery requests fall within that scope. [Citations.] Fourth, it enables defendants to form complete and well-reasoned defenses, ensuring that they need not wait until the eve of trial to effectively defend against charges of trade secret misappropriation. [Citation.]”’ [Citation.]” (Brescia, supra, 172 Cal.App.4th at p. 144.)

“Reasonable particularity” mandated by section 2019.210 does not mean that the party alleging misappropriation has to define every minute detail of its claimed trade secret at the outset of the litigation. Nor does it require a discovery referee or trial court to conduct a miniature trial on the merits of a misappropriation claim before discovery may commence. Rather, it means that the plaintiff must make some showing that is reasonable, i.e., fair, proper, just and rational [citation], under all of the circumstances to identify its alleged trade secret in a manner that will allow the trial court to control the scope of subsequent discovery, protect all parties’ proprietary information, and allow them a fair opportunity to prepare and present their best case or defense at a trial on the merits. [Citations.]

(Advanced Modular, supra, 132 Cal.App.4th at p. 835.)

“ ‘Trade secret’ means information, including a formula, pattern, compilation, program, device, method, technique, or process, that: [¶] (1) Derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and [¶] (2) Is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Cal. Civ. Code, § 3426.1, subd. (d).)

Here, SunPower’s trade secret designation does not identify the alleged trade secrets with reasonable particularity. For instance, SunPower states that its trade secrets are the approximately 1,700 files listed in Exhibit 1, the 61 emails authored by Cole Peyton, and “any information derived, modified, or copied therefrom.” (Kao Dec., ¶ 3, Ex. 1, italics added.) This broad, “catch-all” language renders the trade secret designation vague and virtually boundless. (See Perlan Therapeutics, Inc. v. Superior Court (2009) 178 Cal.App.4th 1333, 1345, fn. 10 [“Perlan’s eight purported trade secrets are: “(1) the Charles Invention, (2) Perlan’s Protein Multimerization Process, (3) Perlan’s novel idea [involving sialidase to] create a drug to combat the flu, and (4) all related research, (5) development, (6) advancements, (7) improvements and (8) processes related thereto.” Obviously, the final five categories lack any reasonable particularity ….”] & 1350 [“Perlan is not entitled to include broad, ‘catch-all’ language as a tactic to preserve an unrestricted, unilateral right to subsequently amend its trade secret statement.”]; see also
E. & J. Gallo Winery v. Instituut Voor Landbouw-En Visserijonderzoek (E.D. Cal., June 19, 2018, No. 117CV00808DADEPG) 2018 WL 3062160, at *5 (E. & J.) [the use of “catch-all” descriptions has been rejected as “so vague and unspecific as to constitute no disclosure at all since Defendants cannot ‘ascertain at least the boundaries’ of the alleged trade secrets”].)

Furthermore, the description of SunPower’s first identified trade secret is confusing and does not clearly identify the claimed trade secret. SunPower not only states that each file listed in Exhibit 1 is, itself, a trade secret compilation, but that specific files “contain confidential, proprietary, and trade secret information” and the approximately 1,700 files, as a whole, constitute “a complete library of SunPower proprietary and confidential information, including a compilation of SunPower’s most valuable trade secrets.” (Kao Dec., ¶ 3, Ex. 1.) Thus, it is unclear if SunPower is claiming that each file constitutes a trade secret compilation, the files, when taken as a whole, constitute a trade secret compilation, and/or specific files contain trade secret information.

Moreover, to the extent SunPower asserts that the files contain trade secret information, it fails to point to the portion of the documents containing the trade secret information or describe the specific trade secret information contained in the documents. (See Loop AI Labs Inc. v. Gatti (N.D. Cal. 2016) 195 F.Supp.3d 1107, 1116 [indicating that if a plaintiff references a document as setting forth one or more trade secrets, the plaintiff must specify precisely which portions of the document describes the trade secret]; see also E. & J., supra, 2018 WL 3062160, at *5 [“references to unarticulated ‘trade secret information’ ” were failed to “clearly articulate the alleged trade secrets”].)

Accordingly, Standard and GAF Energy’s motion is GRANTED to the extent it seeks to stay discovery in this action with respect to the claim for trade secret misappropriation until SunPower has served an adequate trade secret disclosure under Code of Civil Procedure section 2019.210. SunPower shall serve Defendants with an amended trade secret disclosure within 30 days of the date of the filing of this order on this matter.